VirnetX Holding Corporation (NYSEAMEX:VHC) investors should pay attention to a decrease in enthusiasm from smart money lately.
At the moment, there are plenty of gauges investors can use to monitor stocks. A couple of the most useful are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the market by a healthy margin (see just how much).
Equally as beneficial, positive insider trading sentiment is another way to parse down the investments you're interested in. Obviously, there are many motivations for a corporate insider to downsize shares of his or her company, but only one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the market-beating potential of this strategy if "monkeys" know where to look (learn more here).
With all of this in mind, we're going to take a look at the latest action regarding VirnetX Holding Corporation (NYSEAMEX:VHC).
Heading into 2013, a total of 6 of the hedge funds we track held long positions in this stock, a change of -14% from one quarter earlier. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes significantly.
When looking at the hedgies we track, Eric Bannasch's Cadian Capital had the largest position in VirnetX Holding Corporation (NYSEAMEX:VHC), worth close to $36.1 million, accounting for 1.2% of its total 13F portfolio. On Cadian Capital's heels is Citadel Investment Group, managed by Ken Griffin, which held a $6.4 million call position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Daniel S. Och's OZ Management, and Daniel S. Och's OZ Management.
Because VirnetX Holding Corporation (NYSEAMEX:VHC) has experienced bearish sentiment from the smart money, it's easy to see that there were a few funds that decided to sell off their full holdings in Q4. Interestingly, D. E. Shaw's D E Shaw sold off the largest stake of the 450+ funds we watch, comprising close to $2.4 million in stock., and Chuck Royce of Royce & Associates was right behind this move, as the fund cut about $0.6 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds in Q4.
Bullish insider trading is particularly usable when the company we're looking at has experienced transactions within the past half-year. Over the latest 180-day time frame, VirnetX Holding Corporation (NYSEAMEX:VHC) has experienced zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
Let's go over hedge fund and insider activity in other stocks similar to VirnetX Holding Corporation (NYSEAMEX:VHC). These stocks are J2 Global Inc (NASDAQ:JCOM), ExactTarget Inc (NYSE:ET), Demand Media Inc (NYSE:DMD), DealerTrack Technologies Inc (NASDAQ:TRAK), and Angie's List Inc (NASDAQ:ANGI). All of these stocks are in the internet software & services industry and their market caps match VHC's market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|J2 Global Inc (NASDAQ:JCOM)||10||0||5|
|ExactTarget Inc (NYSE:ET)||9||2||17|
|Demand Media Inc (NYSE:DMD)||8||0||2|
|DealerTrack Technologies Inc (NASDAQ:TRAK)||9||0||8|
|Angie's List Inc (NASDAQ:ANGI)||9||0||6|
With the results demonstrated by the aforementioned tactics, retail investors must always watch hedge fund and insider trading sentiment, and VirnetX Holding Corporation (NYSEAMEX:VHC) shareholders fit into this picture quite nicely.